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ADMINISTRATIVE AND MANAGEMENT
SERVICE AGREEMENT
(ESS to VIALTA)
THIS ADMINISTRATIVE AND MANAGEMENT SERVICE AGREEMENT (this "Agreement")
is entered into effective as of August 1, 1999 by and between XXXXXX.xxx, a
California corporation, with offices at 00000 Xxxxxxx Xxxxxxxxx, Xxxxxxx,
Xxxxxxxxxx 00000 ("VIALTA") and ESS Technology, Inc., a California corporation,
with principal offices at 00000 Xxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000
("ESS").
WHEREAS, VIALTA is in the business of designing, developing,
manufacturing and marketing multi-media appliances, applications and content for
the Internet utilizing highly integrated technologies in digital audio, digital
video, communication Internet phones and video phones for sale to the consumer
product markets, (the "VIALTA Products");
WHEREAS, ESS is in the business of designing, developing, manufacturing
and marketing highly integrated mixed signal semiconductor multi-media solutions
for sale to desktop and notebook personal computer markets and consumer product
markets; and
WHEREAS, VIALTA desires to have ESS provide services to VIALTA.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF ESS
(a) SERVICES. Subject to the terms and conditions herein, VIALTA
hires ESS to perform certain administrative and managerial functions. ESS shall
provide VIALTA as required by VIALTA with administrative and managerial services
to include, without limitation, G&A, sales support, marketing support,
production and logistical support, financial oversight, accounting assistance,
contract review, personnel services (including training of employees), and such
other general and administrative services as VIALTA shall require. ESS shall
perform these services in consideration of a service fee, in accordance with the
terms of this Agreement. ESS shall not have the authority to bind VIALTA in any
respect. Without limiting the foregoing, ESS shall not have the authority to
enter into contracts with customers on behalf of VIALTA except as authorized by
VIALTA.
(b) ACTIVITIES NOT COVERED. The parties hereto agree that this
Agreement does not apply to any stewardship or control services that are based
on a shareholder-corporation or parent-subsidiary relationship among affiliated
companies, nor to services which are duplicative of services which another party
is performing for itself.
(c) INDEPENDENT CONTRACTORS. The relationship of VIALTA and ESS
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed to (i) give either party hereto
the power to direct and control the day-to-day activities of the other, (ii)
constitute the parties as partners, joint venturers, principal
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and agent, employer and employee, co-owners, or otherwise as participants in a
joint undertaking, or (iii) allow ESS to create or assume any obligation on
behalf of VIALTA for any purpose whatsoever. All financial and other obligations
associated with VIALTA's business are the sole responsibility of VIALTA. ESS
shall be solely responsible for, and shall indemnify and hold VIALTA free and
harmless from, any and all claims, damages or lawsuits (including VIALTA's
attorneys' fees) arising out of the acts of ESS, its employees or its agents.
2. REMUNERATION
(a) COMPENSATION. ESS's compensation for performing its
administrative functions under the terms of this Agreement shall be the service
fee computed in accordance with this section (the "Service Fee").
(b) THE SERVICE FEE. VIALTA shall pay ESS service fees in an amount
equal to the sum of all of ESS's Direct and Indirect Costs, enumerated as
follows, plus a 5% markup. "Direct Costs" shall include all costs of labor,
plant and office space, equipment and materials that are specifically
attributable to the services provided by ESS under this Agreement, including
allowances for the depreciation of equipment and other capital assets used in
the performance of the services, as carried out in ESS's local records of
account. "Indirect Costs" shall include a reasonable portion of ESS's general
overhead expenses that are reasonably allocable to the provision of the services
hereunder. All specific costs (ie. Advertising and consulting) pertaining to one
entity shall be paid for by that specific entity and shall be excluded from the
service fee.
(c) MANNER OF PAYMENT. Payment of the Service Fee shall be made in
United States Dollars directly to ESS or to such bank as is designated by ESS,
and shall be made in strict compliance with all applicable governmental
regulations and rulings, including the withholding of any taxes required by law.
(d) TIME OF PAYMENT. The Service Fee shall be due and payable 45
days after the end of each calendar quarter (or 45 days after the end of the
first fiscal year hereof) during the term of this Agreement. To the extent not
otherwise prohibited under applicable local law, amounts owed by VIALTA to ESS
pursuant to this Section 2(d) may be offset or netted against other indebtedness
among the parties. To the extent desired by the parties hereto, payments due
hereunder may be made in a timely manner so as to avoid the imputation of
interest under applicable tax laws.
(e) QUARTERLY STATEMENTS. ESS shall submit to VIALTA quarterly
statements of the Service Fee due and payable under the terms of this Agreement.
3. TERM AND TERMINATION
(a) TERM. This Agreement shall continue in force for a fixed term
of 1 year from the date hereof unless terminated earlier under the provisions of
this Section 3. At the end of the fixed term, this Agreement shall renew
automatically for additional 1 year terms (subject to earlier under the
provisions of this Section 3), without notice, unless prior to that time one
party provides written notice of non-renewal to the other party.
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(b) TERMINATION FOR CONVENIENCE. This Agreement may be terminated
by either party for any reason or no reason, whether or not extended beyond the
first year, by giving the other party written notice of the termination 60 days
in advance.
(c) TERMINATION FOR CAUSE. If either party materially defaults in
its performance or breaches any of the terms or conditions of this Agreement,
then the other party may given written notice to the breaching or defaulting
party that if the breach or default is not cured within 30 days the Agreement
will be terminated. If such notice is given and the breach or default is not
cured during the 30-day period, then the Agreement shall automatically terminate
at the end of that period.
(d) TERMINATION FOR INSOLVENCY. This Agreement shall terminate
immediately without notice: (i) upon the institution by or against VIALTA or ESS
of insolvency, receivership or bankruptcy proceedings or any other proceedings
for the settlement of VIALTA's or ESS's debts; (ii) upon VIALTA's or ESS's
making an assignment for the benefit of creditors; or (iii) upon VIALTA's or
ESS's dissolution or liquidation.
(e) TRANSITION. Upon termination or expiration of this Agreement,
each party shall diligently cooperate with the other to effect a smooth and
orderly transition. From the time that a notice of termination is received by
either party until the effective termination date, each party shall cooperate
fully with any newly appointed party performing the duties contemplated
hereunder.
(f) LIMITATION ON LIABILITY. In the event of termination by either
party in accordance with any of the provisions of this Agreement, neither party
shall be liable to the other because of such termination for compensation,
reimbursement or damages on account of the loss of prospective profits or
anticipated sales or on account of expenditures, investments, leases or
commitments in connection with the business or goodwill of the other party.
VIALTA's sole liability under the terms of this Agreement shall be for any
unpaid Service Fees under Section 2.
(g) SURVIVAL OF CERTAIN TERMS. The provisions of Sections 2, 3, 4,
5, and 6 shall survive the termination or expiration of this Agreement for any
reason. All other rights and obligations of the parties shall cease upon
termination or expiration of this Agreement.
4. LIMITATION ON LIABILITY
VIALTA'S AND ESS'S LIABILITY ARISING OUT OF THIS AGREEMENT SHALL BE
LIMITED TO THE SERVICE FEE PAYABLE TO ESS. IN NO EVENT SHALL VIALTA OR ESS BE
LIABLE TO THE OTHER PARTY OR ANY OTHER ENTITY FOR ANY SPECIAL, CONSEQUENTIAL,
INCIDENTAL, OR INDIRECT DAMAGES HOWEVER CAUSED, ON ANY THEORY OF LIABILITY, AND
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
5. CONFIDENTIALITY
VIALTA and ESS each acknowledge that by reason of its relationship
with the other party hereunder it may have access to certain information and
materials concerning such
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other party's business, plans, customers, technology, and products that are
confidential and of substantial value to VIALTA or ESS, as the case may be,
which value would be impaired if such information were disclosed to third
parties. VIALTA and ESS each agree that they shall not use in any way for their
own account or the account of any third party, nor disclose to any third party,
any such confidential information revealed to it by the other party. VIALTA and
ESS shall each take every reasonable precaution to protect the confidentiality
of such information, including, at the request of the other party, the entry by
VIALTA's or ESS's agents and employees into confidentiality agreements in a form
approved by the other party, prohibiting any disclosure to third parties of
confidential information provided by VIALTA or ESS, as the case may be. In the
event of termination or expiration of this Agreement, there shall be no use or
disclosure by VIALTA or ESS, their agents, or employees of any confidential
information of the other party. Each party shall deliver to the other party all
copies within its possession or within its control of all documents and data
relating to the conduct of VIALTA's or ESS's business.
6. GENERAL PROVISIONS
(a) GOVERNING LAW AND JURISDICTION. This Agreement shall be
governed by and construed under the laws of the State of California, as applied
to contracts made and to be fully performed entirely within that state between
residents of that state. All disputes arising out of this Agreement shall be
subject to the exclusive jurisdiction and venue of the California State courts
of Santa Xxxxx County, California (or, if there is federal jurisdiction, the
United States District Court for the Northern District of California). VIALTA
and ESS hereby expressly consent to (i) the personal jurisdiction and venue of
these courts and (ii) service of process being effected by registered airmail
sent to the address set forth in Section 6(c) below.
(b) ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement and understanding of the parties relating to the subject matter herein
and merges all prior discussions between them. No modification of or amendment
to this Agreement, nor any waiver of any rights under this Agreement, shall be
effective unless in writing signed by the party to be charged.
(c) NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed given if sent by prepaid registered or
certified airmail, return receipt requested (if available), or sent by telex,
facsimile or similar communication, and confirmed by such airmail, postage
prepaid, addressed to the other party at the address shown at the beginning of
this Agreement or at such other address for which such party gives notice
hereunder.
(d) FORCE MAJEURE. Nonperformance of either party shall be excused
to the extent that performance is rendered impossible by strike, fire, flood,
governmental acts, orders or restrictions, or any other reason where failure to
perform is beyond the control and not caused by the negligence of the
non-performing party, provided that the non-performing party uses its reasonable
best efforts to promptly resume performance once it is possible to do so.
(e) NON-ASSIGNABILITY AND BINDING EFFECT. Neither party shall,
without the prior written consent of the other party, assign this Agreement in
whole or in part or delegate any
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right or duty hereunder to any third party, sub-agent, representative or
consultant. Any attempted assignment not having such consent shall be void and
without effect.
(f) LEGAL EXPENSES. The prevailing party in any legal action
brought by one party against the other and arising out of this Agreement shall
be entitled, in addition to any other rights and remedies it may have, to
reimbursement for its expenses, including court costs and reasonable attorneys'
fees.
(g) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
XXXXXX.XXX ESS TECHNOLOGY, INC.
By: /s/ Xxxx X.X. Xxxx By: /s/ Xxxxxx X. Xxxxx
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Title: CEO Title: CEO
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